ClarityHow to use this tool
- Enter early-payment discount, discount payment day, full payment due day, days per year convention.
- Select Calculate to view the result.
- Check the method and assumptions below before using the result.
The method, explained
Annualized simple cost = discount/(100−discount) × year days/(net days−early days) × 100.
Using early-payment discount = 2 %, discount payment day = 10 days, full payment due day = 30 days, days per year convention = 365 days, the result is 37.244898 %. Change these example inputs to match your task; use the method above to check each step.
Understanding your result
Simple annualization of the financing interval, not a quoted APR or effective compound rate. Assumes full eligibility for the discount.
What to keep in mind
Simple annualization of the financing interval, not a quoted APR or effective compound rate. Assumes full eligibility for the discount. Use consistent currencies, reporting periods and accounting definitions. This arithmetic estimate excludes items not entered in the form.
Common questions
How do I use this early payment discount cost calculator?
Estimate the annualized simple cost of forgoing an early-payment discount. Enter early-payment discount in %, discount payment day in days, full payment due day in days, days per year convention in days. The starting example is editable; use values for the same system or project.
Which assumptions affect this result?
Simple annualization of the financing interval, not a quoted APR or effective compound rate. Assumes full eligibility for the discount.
Methodology maintained by ClarityKit. How these tools are built and checked.